MATERNITY CHILDREN’S HOSPITAL VS SECRETARY OF LABOR (Labor Law HELD:1.
HELD:1. The answer is in the affirmative the Regional Director has a jurisdiction in
defined)
FACTS:
 Petitioner is a semi-governmental hospital in Cagayan De Oro and
Employing forty-one (41) employees.
 Aside from salary and living allowances, the employees are given food,
but the amount of which is deducted from their respective salaries. On May
3, 1986, ten (10) employees filed a complaint with the Regional Director of
Labor and Employment, Region 10, for underpayment of their salaries and
ECOLAS.
 Consequently, the Regional Director directed two of his labor standard
and welfare officers to investigate and ascertain the truth of the allegations
in the complaint.
 Based on the report and recommendation, the Regional Director issued an
order dated August 4, 1986, directing payment of ₱723, 888.58, to all the
petitioner’s employees.
 The Secretary of Labor likewise affirmed the Decision and dismissed the
Motion for Reconsideration of the petitioner.
 In a petition for certiorari, petitioner questioned the jurisdiction of the
Regional Director and the all-embracing applicability of the award
involving salary differentials and ECOLAS, in that it covers not only the
hospitals employees who signed the complaints, but also those who are not
signatories to the complaint, and those who were no longer in the service of
the hospital at the time the complaint was filed.
ISSUES:
1. Whether or not the Regional Director had jurisdiction over the case; and
2. Whether or not the Regional Director erred in extending the award to all hospital
employees?
this labor standard case. This is Labor Standard case, and is governed by Article 128
(b) of the Labor Code , as amended by E.O. No. 111.
“ Labor standards refer to the minimum requirements prescribed
by existing laws, rules, and regulations relating to wages, hours of
work,cost of living allowance and other monetary and welfare
benefits,including occupational, safety, and health standards (Section 7,
Rule I,Rules on the Disposition of Labor Standards Cases in the Regional
Office, dated September 16, 1987)”
Under the present rules, a Regional Director exercises both visitorial and enforcement
power over labor standards cases, and is therefore empowered to adjudicate money
claims, provided there still exists an employer-employee relationship, and the
findings of the regional office is not contested by the employer concerned. We
believed…that even in the absence of E. O. No. 111, Regional Directors already had
enforcement powers over money claims, effective under P.D. No. 850, issued on
December 16, 1975, which transferred labor standards cases from the arbitration
systemto the enforcement system.
2. The Regional Director correctly applied the award with respect to those employees
who signed the complaint, as well as those who did not sign the complaint, but were
still connected with the hospital at the time the complaint was filed.
The justification for the award to this group of employees who were not signatories to
the complaint is that the visitorial and enforcement powers given to the Secretatry
of Labor labor is relevant to, and exercisable over establishments, not over
individual members/employees ,because what is sought to be achieved by its
exercise is the observance of, and/ or compliance by such firm/establishment with the
labor standards regulations.
However, there is no legal justification for the award in favor of those employees who
were no longer connected with the hospital t the time the complaint was filed.
Article 129 of the Labor Code in aid of the enforcement power of the Regional
Director is not applicable where the employee seeking to be paid is separated from
service. His claim is purely money claim that has to be subject of arbitration
proceedings and therefore within the original and exclusive jurisdiction of the Labor
Arbiter.
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS VS.
DRILON G.R. NO. L-81958 JUNE 30, 1988
FACTS:
 The Philippine Association of Service Exporters, Inc. (PASEI)
challenges the Constitutional validity of Department Order No. 1,
Series of 1988, of the Department of Labor and Employment, in the
character of "GUIDELINES GOVERNING THE TEMPORARY
SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND
HOUSEHOLD WORKERS," in this petition for certiorari and
prohibition.
 Specifically, the measure is assailed for "discrimination against males
or females;" that it "does not apply to all Filipino workers but only
to domestic helpers and females with similar skills;" and that it is
violative of the right to travel.
 It is held likewise to be an invalid exercise of the lawmaking power,
police power being legislative, and not executive, in character.
 In its supplement to the petition, PASEI invokes Section 3, of Article
XIII, of the Constitution, providing for worker participation "in
policy and decision-making processes affecting their rights and
benefits as may be provided by law." Department Order No. 1, it is
contended, was passed in the absence of prior consultations.
 It is claimed, finally, to be in violation of the Charter's non-
impairment clause, in addition to the "great and irreparable injury"
that PASEI members face should the Order be further enforced.
ISSUE: Whether or not the Department Order No. 1 in nature of the
police power is valid under the Constitution?
HELD: VALID
As a general rule, official acts enjoy a presumed validity. In the absence
of clear and convincing evidence to the contrary, the presumption
logically stands.
The petitioner has shown no satisfactory reason why the contested
measure should be nullified.
There is no question that Department Order No. 1 applies only to "female
contract workers," but it does not thereby make an undue discrimination
between the sexes.
It is well-settled that "equality before the law" under the Constitution
does not import a perfect Identity of rights among all men and women.
It admits of classifications, provided that
(1) such classifications rest on substantial distinctions;
(2) they are germane to the purposes of the law;
(3) they are not confined to existing conditions; and
(4) they apply equally to all members of the same class.
The Court is well aware of the unhappy plight that has befallen our
female labor force abroad, especially domestic servants, amid
exploitative working conditions marked by physical and personal abuse.
As precisely the caretaker of Constitutional rights, the Court is called
upon to protect victims of exploitation. In fulfilling that duty, the Court
sustains the Government's efforts.
The same, however, cannot be said of our male workers. In the first place,
there is no evidence that, except perhaps for isolated instances, our men
abroad have been afflicted with an identical predicament.
Suffice it to state, then, that insofar as classifications are concerned, this
Court is content that distinctions are borne by the evidence.
Discrimination in this case is justified.
There is likewise no doubt that such a classification is germane to the
purpose behind the measure. Unquestionably, it is the avowed objective
of Department Order No. 1 to "enhance the protection for Filipino
female overseas workers" this Court has no quarrel that in the midst of
the terrible mistreatment Filipina workers have suffered abroad, a ban on
deployment will be for their own good and welfare.
SERRANO V. GALLANT MARITIME SERVICES,INC.
FACTS:
 Petitioner was hired by Gallant Maritime Services, Inc. and Marlow
Navigation Co., Ltd. (respondents) under a Philippine Overseas
Employment Administration (POEA)-approved Contract of Employment
with the following terms and conditions:
o Duration of contract 12 months
o Position Chief Officer
o Basic monthly salary US$1,400.00
o Hours of work 48.0 hours per week
o Overtime US$700.00 per month
o Vacation leave with pay 7.00 days per month
 On the date of his departure, petitioner was constrained to accept a
downgraded employment contract for the position of Second Officer with a
monthly salary of US$1,000.00, upon the assurance and representation of
respondents that he would be made Chief Officer by the end of April 1998.
 Respondents did not deliver on their promise to make petitioner Chief
Officer. Hence, petitioner refused to stay on as Second Officer and was
repatriated to the Philippines on May 26, 1998.
 Petitioner’s employment contract was for a period of 12 months or from
March 19, 1998 up to March 19, 1999, but at the time of his repatriation on
May 26, 1998, he had served only two (2) months and seven (7) days of his
contract, leaving an unexpired portion of nine (9) months and twenty-
three (23) days.
 Petitioner filed with the Labor Arbiter (LA) a Complaint against
respondents for constructive dismissal and for payment of his money
claims in the total amount of US$26,442.73.
 The LA rendered a Decision dated July 15, 1999, declaring the dismissal of
petitioner illegal and awarding him monetary benefits.
 In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his
computation on the salary period of three months only — rather than the
entire unexpired portion of nine months and 23 days of petitioner’s
employment contract – applying the subject clause. However, the LA
applied the salary rate of US$2,590.00, consisting of petitioner’s “[b]asic
salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, +
US$490.00/month, vacation leave pay = US$2,590.00/compensation per
month.”
 Respondents appealed to the (NLRC) to question the finding of the LA that
petitioner was illegally dismissed.
 The NLRC modified the LA Decision and corrected the LA’s computation of
the lump-sum salary awarded to petitioner by reducing the applicable
salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042 “does
not provide for the award of overtime pay, which should be proven to have
been actually performed, and for vacation leave pay.
 The CA affirmed the NLRC ruling on the reduction of the applicable
salary rate; however, the CA skirted the constitutional issue raised by
petitioner.
 His Motion for Reconsideration having been denied by the CA, petitioner
brings his cause to this Court on the following grounds:
 The Court of Appeals and the labor tribunals have decided the case in a way
not in accord with applicable decision of the Supreme Court involving
similar issue of granting unto the migrant worker back wages equal to the
unexpired portion of his contract of employment instead of limiting it to
three (3) months.
 Even without considering the constitutional limitations [of] Sec. 10 of
Republic Act No. 8042, the Court of Appeals gravely erred in law in
excluding from petitioner’s award the overtime pay and vacation pay
provided in his contract since under the contract they form part of his salary.
  The Court now takes up the full merit of the petition mindful of the extreme
importance of the constitutional question raised therein.
ISSUES:
1. Whether Section 10 (par 5) of RA 8042 is unconstitutional
2. Proper computation of the Lump-sum salary to be awarded to petitioner by
reason of his illegal dismissal
3. Whether the overtime and leave pay should form part of the salary basis in the
computation of his monetary award
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner
was illegal is not disputed. Likewise not disputed is the salary differential of
US$45.00 awarded to petitioner in all three fora.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of
petitioner at the monthly rate of US$1,400.00 covering the period of three months out
of the unexpired portion of nine months and 23 days of his employment contract or a
total of US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that, in
addition to the US$4,200.00 awarded by the NLRC and the CA, he is entitled to
US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the entire
nine months and 23 days left of his employment contract, computed at the monthly
rate of US$2,590.00.31
Arguments of the Petitioner
For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th
paragraph of Section 10, Republic Act (R.A.) No. 8042, violates the OFWs’
constitutional rights in that it impairs the terms of their contract, deprives them of
equal protection and denies them due process.
The Arguments of Respondents
Respondents contend that the constitutional issue should not be entertained,
for this was belatedly interposed by petitioner in his appeal before the CA, and not at
the earliest opportunity, which was when he filed an appeal before the NLRC.40
The Arguments of the Solicitor General
The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on
July 15, 1995, its provisions could not have impaired petitioner’s 1998 employment
contract. Rather, R.A. No. 8042 having preceded petitioner’s contract, the provisions
thereof are deemed part of the minimum terms of petitioner’s employment, especially
on the matter of money claims, as this was not stipulated upon by the parties.
The Court’s Ruling:
First Issue: Does the subject clause violate Section 1, Article III of the Constitution,
and Section 18, Article II and Section 3, Article XIII on Labor as protected sector?
The answer is in the affirmative. YES
Section 1, Article III of the Constitution guarantees:
No person shall be deprived of life, liberty, or property without
due process of law nor shall any person be denied the equal protection of
the law.
Section 18, Article II and Section 3, Article XIII accord all members of the labor
sector, without distinction as to place of deployment, full protection of their rights
and welfare.
 To Filipino workers, the rights guaranteed under the foregoing
constitutional provisions translate to economic security and parity: all
monetary benefits should be equally enjoyed by workers of similar category,
while all monetary obligations should be borne by them in equal degree;
none should be denied the protection of the laws which is enjoyed by, or
spared the burden imposed on, others in like circumstances.
 Imbued with the same sense of “obligation to afford protection to labor,”
the Court in the present case also employs the standard of strict judicial
scrutiny, for it perceives in the subject clause a suspect classification
prejudicial to OFWs.
 Upon cursory reading, the subject clause appears facially neutral, for it
applies to all OFWs. However, a closer examination reveals that the subject
 clause has a discriminatory intent against, and an invidious impact on
OFWs
 The subject clause does not state or imply any definitive governmental
purpose; and it is for that precise reason that the clause violates not just
petitioner’s right to equal protection, but also her right to substantive due
process under Section 1, Article III of the Constitution.
Second Issue
It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the
unexpired portions thereof, were treated alike in terms of the computation of their
monetary benefits in case of illegal dismissal. Their claims were subjected to a
uniform rule of computation: their basic salaries multiplied by the entire unexpired
portion of their employment contracts.
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule
of computation of the money claims of illegally dismissed OFWs based on their
employment periods, in the process singling out one category whose contracts have
an unexpired portion of one year or more and subjecting them to the peculiar
disadvantage of having their monetary awards limited to their salaries for 3 months
or for the unexpired portion thereof, whichever is less, but all the while sparing the
other category from such prejudice, simply because the latter’s unexpired contracts
fall short of one year.
Prior to R.A. No. 8042, a uniform system of computation of the monetary awards of
illegally dismissed OFWs was in place. This uniform system was applicable even to
local workers with fixed-term employment.
The subject clause does not state or imply any definitive governmental purpose; and
it is for that precise reason that the clause violates not just petitioner’s right to equal
protection, but also her right to substantive due process under Section 1, Article III of
the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries for the
entire unexpired period of nine months and 23 days of his employment contract,
pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.
Third Issue: NO
Petitioner contends that his overtime and leave pay should form part of the salary
basis in the computation of his monetary award, because these are fixed benefits
that have been stipulated into his contract.
Petitioner is mistaken.
The word salaries in Section 10(5) does not include overtime and leave pay.
For seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a
Standard Employment Contract of Seafarers, in which salary is understood as the
basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime
pay is compensation for all work “performed” in excess of the regular eight hours,
and holiday pay is compensation for any work “performed” on designated rest
days and holidays.
In the same vein, the claim for the day’s leave pay for the unexpired portion of the
contract is unwarranted since the same is given during the actual service of the
seamen.
WHEREFORE, the Court GRANTS the Petition. The subject clause “or for three
months for every year of the unexpired term, whichever is less” in the 5th paragraph
of Section 10 of Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL; and
the December 8, 2004 Decision and April 1, 2005 Resolution of the Court of Appeals
are MODIFIED to the effect that petitioner is AWARDED his salaries for the entire
unexpired portion of his employment contract consisting of nine months and 23 days
computed at the rate of US$1,400.00 per month.
Union of Filipro Employees v. Vivar
Facts:
 Filipro Inc. (now Nestle Philippines, Inc.) had excluded sales personnel from
the holiday pay award and changed the divisor in the computation of
benefits from 251 to 261 days.
 Both Filipro and the Union of Filipro Employees submitted the case for
voluntary arbitration and appointed respondent Benigno Vivar,Jr. as
voluntary arbitrator.
 In his decision, Vivar directed Filipro to “pay its monthly paid employees
 holiday pay pursuant to Article 94 of the Code, subject only to the exclusions
and limitations specified in Article 82 and such other legal restrictions as are
provided for in the Code.”
 With the decision by Vivar, Filipro filed a motion for clarification seeking (1)
the limitation of the award to 3 years, (2) exclusion of its sales personnel
(consisted by salesmen, sales representatives, truck drivers, merchandisers
and medical representatives) from the award of the holiday pay, and (3)
deduction from the holiday pay award of overpayment for overtime, night
differential, vacation and sick leave benefits due to the use of 251 divisor.
 On the same light, the Union filed their answer that the award should be
made effective from the date of effectivity of the Labor Code, their sales
personnel are not field personnel and are therefore entitled to holiday pay,
and the use of 251 as divisor is an established employee benefit which
cannot be diminished.
 Vivar issued an order declaring that the effectivity of the holiday pay award
shall retroact to November 1, 1974, the date of effectivity of the labor Code.
However, he adjudged the sales personnel are field personnel and, as such,
are not entitled to holiday pay.
 He likewise ruled that the divisor should bechanged from 251 to 261 due to
the grant of 10 days’ holiday pay and ordered the reimbursement of
overpayment for overtime, night differential, vacation and sick leave pay
due to the use of 251 days as divisor.
 Treating the motions for partial reconsideration of the parties, Vivar
forwarded the case to the NLRC, which remanded the case to Vivar on the
ground that it has no jurisdiction to review decisions in voluntary
arbitration cases. In a letter, Vivar refused to take cognizance of the case
because, according to him, he had resigned from service already.
Ruling:
1.Whether or not Nestle’s sales personnel are entitled to holiday pay. - NO
Under Article 82, field personnel are not entitled to holiday pay. Said article defines
field personnel as
“non-agricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual
hours of work in the field cannot bedetermined with reasonable certainty.”
It is undisputed that these sales personnel start their field work at 8:00 a.m. after
having reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if
they are Makati-based. However, the
Union maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the
sales personnel’s working hours which can be determined with reasonable certainty.
However, the court does not agree. The law requires that the actual hours of work in
the field be reasonably ascertained. The company has no way of determining
whether or not these sales personnel, even if they report to the office before 8:00 a.m.
prior to field work and come back at 4:30 p.m., really spend the hours in between in
actual field work.
Moreover, the Court fails to see how the company can monitor the number of actual
hours spend in field work by an employee through imposition of sanctions on
absenteeism.
2. Whether or not, related to the award of holiday pay, the divisor should be
changed from 251 to 261 days and whether or not the previous use of 251 as divisor
resulted in overpayment for overtime

The use of 251 days’ divisor by Filipro indicates that holiday pay is not yet included
in the employee’s salary, otherwise the divisor should have been 261. It must be
stressed that the daily rate, assuming there are no intervening salary increases, is a
constant figure for the purpose of computing overtime and night differential pay and
commutation of sick and vacation leave credits. Necessarily, the daily rate should
also be the same for computing the 10 unpaid holidays.

The respondent Arbitrator’s order to change the divisor from 251 to 261 days would
result in a lower daily rate which is violative of the prohibition or non-diminution
of benefits found in Article 100 of the Labor Code.

To maintain the same daily rate if the divisor is adjusted to 261 days, then the
dividend, which represents the employee’s annual salary, should correspondingly be
increased too incorporate the holiday pay.

Moreover, the reckoning period for the application of the holiday award is October
23, 1984.
HSBC v. NLRC [G.R. No. 116542. July 30, 1996]
Facts:
 Complainant is a regular rank and file employee of HSBC in Makati City.
Complainant called the bank to inform the latter that he had an upset
stomach and would not be able to report for work. His superior, however,
requested him to report for work because the department he was then in
was undermanned but complainant insisted that it was impossible for him
to report for work, hence, he was allowed to go on sick leave on that day.
 Bank called up Dr. Logos to verify the truth of complainants statement but
the doctor denied that he examined or attended to complainant on
February 3, 1993 and the last time complainant consulted him was in
December 1992.
 For this reason, the bank directed complainant to explain his acts of
dishonesty because allegedly he was not honest in telling the bank that he
had an upset stomach on February 3, 1993, and that he consulted Dr. Logos
on that day.
 Complainant, in his written statement, further admitted that his statement
about his not staying at his house for one week and his consulting a doctor
was incorrect, but that the same was not given with malicious intention or
deceit or meant to commit fraud against the bank, its operations, customers
and employees.
 However, on February 16, 1993, the bank came out with a memorandum
terminating his services effective March 16, 1993 pursuant to Article 13,
Section VI of the Collective Bargaining Agreement between the union of the
rank and file employees of the bank and the company and the banks Code of
Conduct.
 Petitioner insists that private respondent should be dismissed in accordance
with rules contained in its employees handbook stating that any form of
dishonesty shall constitute serious offenses calling for termination.
Issue:
(1) Whether or not private respondents act of making a false statement as to the real
reason for his absence on did not constitute such dishonesty as would warrant his
termination from service.
(2) Whether or not NLRC arbitrarily imposed its value judgment and standard on
petitioners disciplinary rules, thereby unilaterally restricting the Banks power and
prerogative to discipline its employees according to reasonable rules and regulations
Held: (1) YES.
It is unarguable that private respondents false information concerning his
whereabouts on February 3, 1993 is not a fraud, nor a false entry in the books of the
bank; neither is it a failure to turn over clients funds, or theft or use of company
assets, or anything analogous as to constitute a serious offense meriting the extreme
penalty of dismissal.
Under Art. 282 of the Labor Code, an employer may terminate an employment for
any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders
of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
representative; and
(e) Other causes analogous to the foregoing.
None of the above apply in the instant case. To be lawful, the cause for termination
must be a serious and grave malfeasance to justify the deprivation of a means of
livelihood.
(2) NO.
It is the NLRC's right and duty to review employers exercise of their prerogative to
dismiss so as to prevent abuse and arbitrariness as granted under Arts. 217 and 218 of
the Labor Code. The employers prerogative and power to discipline and terminate an
employees services may not be exercised in an arbitrary or despotic manner as to
erode or render meaningless the constitutional guarantees of security of tenure and
due process.

Our labor laws, both substantive and procedural, require strict compliance before an
employee may be dismissed.

Petition DISMISSED.
COLGATE PALMOLIVE PHILIPPINES, Inc. vs.
HON. BLAS F. OPLE, COLGATE PALMOLIVE SALES UNION
JUNE 30, 1988
Facts:
 Respondent Union filed a Notice of Strike with the Bureau of
Labor Relations (BLR) on ground of unfair labor practice
consisting of alleged refusal to bargain, dismissal of union
officers/members; and coercing employees to retract their
membership with the union and restraining non-union
members from joining the union.
 The Office of the MOLE, upon petition of petitioner, assumed
jurisdiction over the dispute pursuant to Article 264 (g) of the
Labor Code.
 Petitioner pointed out that the allegations regarding
dismissal from employment due to union membership were
false.
 It also averred that the suspension and eventual dismissal of
the three employees were due to infractions committed by
them and that the management reserves the right to
discipline erring employees. Petitioner also assailed the
legality of the Union, among others.
 The minister rendered its decision, ruling that there was no
merit in the Union’s complaint. It also ruled that the three
dismissed employees were “not without fault” but nonetheless
ordered the reinstatement of the same.
 At the same time, respondent Minister directly certified the
respondent Union as the collective bargaining agent for the
sales force in petitioner company and ordered the
reinstatement of the three salesmen to the company on the
ground that the employees were first offenders.
Issue:
Whether or not the minister erred in directly certifying the Union
based on the latter’s self-serving assertion that it enjoys the support of
the majority of the sales force in petitioner’s company and in ordering
the reinstatement of the three dismissed employees.
Held:
The Court held that the minister failed to determine with legal
certainty whether the Union indeed enjoyed majority
representation.
The Court held that by relying only on the Notice of Strike, the
minister had encouraged disrespect of the law.
He had also erroneously vested upon himself the right to choose the
collective bargaining representative which ought to have been upon
the employees.
The Court held that the reinstatement of the three employees despite
a clear finding of guilt on their part is not in conformity with law.
Ruling otherwise would only encourage unequal protection of the
laws with respect to the rights of the management and the employees.
The court rendered the decision of the minister reversed and set aside,
ordering petitioners to give the three employees their separation pay.
IBAA EMPLOYEES UNION VS. INCIONG
FACTS
Petitioner filed a complaint against the respondent bank for the
payment of holiday pay before the then Department of Labor,
NLRC in Manila.
Conciliation having failed, the case was certified for arbitration
and later on a decision was rendered by the Labor Arbiter
granting petitioner’s complaint.
Respondent bank complied by paying the holiday pay to and
including January 1976.
On December 1975, PD 850 was promulgated amending the
provisions of the Labor Code with the controversial section
stating that monthly paid employees receiving uniform monthly
pay is presumed to be already paid the “10 paid legal holidays”.
Policy instruction 9 was issued thereafter interpreting the said
rule.
Respondents bank stopped the payment by reason of the
promulgated PD 850 and Policy Instruction 9.
ISSUE
Whether or not monthly paid employees are excluded from the
benefit of holiday pay.
HELD
No.
It is elementary in the rules of statutory construction that
when the language of the law is clear and unequivocal the law
must be taken to mean exactly what it says.
In the case at bar, the provisions of the Labor Code on
the entitlement to the benefits of holiday pay are clear and
explicit- it provides for both the coverage of and exclusion
from the benefits.
In Policy Instruction 9, the then Secretary of Labor
categorically state that the benefit is principally intended for
daily paid employees, when the law clearly states that every
worker shall be paid their regular holiday pay.
While it is true that the contemporaneous construction
placed upon a statue by executive officers whose duty is to
enforce it should be given great weight by the courts, still if
such construction is so erroneous, the same must be declared as
null and void.
Brotherhood Labor Unity Movement of the Phil. v. Zamora
Facts:
 The petitioners are workers who have been employed at the San Miguel
Parola Glass Factory as “pahinantes” or “kargadors” for almost seven years.
 They worked exclusively at the SMC plant, never having been assigned to
other companies or departments of San Miguel Corp, even when the volume
of work was at its minimum.
 Their work was neither regular nor continuous, depending on the volume of
bottles to be loaded and unloaded, as well as the business activity of the
company.
 However, work exceeded the eight-hour day and sometimes, necessitated
work on Sundays and holidays. -for this, they were neither paid overtime
nor compensation.
 Sometime in 1969, the workers organized and affiliated themselves with
Brotherhood Labor Unity Movement (BLUM).
 They wanted to be paid to overtime and holiday pay.
 They pressed the SMC management to hear their grievances.
 BLUM filed a notice of strike with the Bureau of Labor Relations in
connection with the dismissal of some of its members.
 San Miguel refused to bargain with the union alleging that the workers are
not their employees but the employees of an independent labor contracting
firm, Guaranteed Labor Contractor.
 The workers were then dismissed from their jobs and denied entrance to the
glass factory despite their regularly reporting for work.
 A complaint was filed for illegal dismissal and unfair labor practices.
Issue:
Whether or not there was employer-employee (ER-EE)relationship between the
workers and San Miguel Corp.
Held:
YES.
In determining if there is an existence of the (ER-EE) relationship, the four-fold test
was used by the Supreme Court. These are:
· The selection and engagement of the employee
· Payment of wages
· Power of dismissal
· Control Test- the employer’s power to control the employee with respect to the
means and methods by which work is to be accomplished
In the case, the records fail to show that San Miguel entered into mere oral
agreements of employment with the workers.
Considering the length of time that the petitioners have worked with the company,
there is justification to conclude that they were engaged to perform activities
necessary in the usual business or trade.
Despite past shutdowns of the glass plant, the workers promptly returned to their
jobs. The term of the petitioner’s employment appears indefinite and the continuity
and habituality of the petitioner’s work bolsters the claim of an employee status.
As for the payment of the workers’ wages, the contention that the independent
contractors were paid a lump sum representing only the salaries the workers where
entitled to have no merit. The amount paid by San Miguel to the contracting firm is
no business expense or capital outlay of the latter. What the contractor receives is a
percentage from the total earnings of all the workers plus an additional amount
from the earnings of each individual worker.
The power of dismissal by the employer was evident when the petitioners had
already been refused entry to the premises. It is apparent that the closure of the
warehouse was a ploy to get rid of the petitioners, who were then agitating the
company for reforms and benefits.
The inter-office memoranda submitted in evidence prove the company’s control
over the workers. That San Miguel has the power to recommend penalties or
dismissal is the strongest indication of the company’s right of control over the
workers as direct employer.
*SC ordered San Miguel to reinstate the petitioners with 3 years backwages.
FRANCISCO, Petitioner, versus NATIONAL LABOR RELATIONS
COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO
ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA and RAMON
ESCUETA, Respondents., G.R. No. 170087, 2006 Aug 31.
FACTS:
Petitioner was hired by Kasei Corporation during its incorporation stage. She was
designated as Accountant and Corporate Secretary and was assigned to handle all
the accounting needs of the company. She was also designated as Liaison Officer to
the City of Makati to secure business permits, construction permits and other licenses
for the initial operation of the company.
Although she was designated as Corporate Secretary, she was not entrusted with the
corporate documents; neither did she attend any board meeting nor required to do
so. She never prepared any legal document and never represented the company as
its Corporate Secretary.
Petitioner was designated Acting Manager. Petitioner was assigned to handle
recruitment of all employees and perform management administration functions;
represent the company in all dealings with government agencies, especially with the
BIR, SSS and in the city government of Makati; and to administer all other matters
pertaining to the operation of Kasei Restaurant which is owned and operated by
Kasei Corporation.
Petitioner was replaced by Fuentes as Manager. Kasei Corporation reduced her
salary, she was not paid her mid-year bonus allegedly because the company was not
earning well. On October 2001, petitioner did not receive her salary from the
company. She made repeated follow-ups with the company cashier but she was
advised that the company was not earning well. Eventually she was informed that
she is no longer connected with the company.
Since she was no longer paid her salary, petitioner did not report for work and
filed an action for constructive dismissal before the labor arbiter. Private
respondents averred that petitioner is not an employee of Kasei Corporation. They
alleged that petitioner was hired in 1995 as one of its technical consultants on
accounting matters and act concurrently as Corporate Secretary. As technical
consultant, petitioner performed her work at her own discretion without control and
supervision of Kasei Corporation. Petitioner had no daily time record and she came
to the office any time she wanted and that her services were only temporary in nature
and dependent on the needs of the corporation.
The Labor Arbiter found that petitioner was illegally dismissed, NLRC affirmed with
modification the Decision of the Labor Arbiter. On appeal, CA reversed the NLRC
decision. CA denied petitioner’s MR, hence, the present recourse.
ISSUES:
1.) WON there was an employer-employee relationship between petitioner and
private respondent; and if in the affirmative,
2.) Whether petitioner was illegally dismissed.
RULING:
Generally, courts have relied on the so-called right of control test where the person
for whom the services are performed reserves a right to control not only the end to be
achieved but also the means to be used in reaching such end. In addition to the
standard of right-of-control, the existing economic conditions prevailing between the
parties, like the inclusion of the employee in the payrolls, can help in determining the
existence of an employer-employee relationship.
There are instances when, aside from the employer’s power to control the employee,
economic realities of the employment relations help provide a comprehensive
analysis of the true classification of the individual, whether as employee,
independent contractor, corporate officer or some other capacity.
It is better, therefore, to adopt a two-tiered test involving:
(1) the employer’s power to control; and
(2) the economic realities of the activity or relationship.
The CONTROL TEST means that there is an employer-employee relationship when
the person for whom the services are performed reserves the right to control not only
the end achieved but also the manner and means used to achieve that end.
There has to be analysis of the totality of economic circumstances of the worker. Thus,
the determination of the relationship between employer and employee depends upon
the circumstances of the whole economic activity, such as:
(1) the extent to which the services performed are an integral part of the employer’s
business;
(2) the extent of the worker’s investment in equipment and facilities;
(3) the nature and degree of control exercised by the employer;
(4) the worker’s opportunity for profit and loss;
(5) the amount of initiative, skill, judgment or foresight required for the success of the
claimed independent enterprise;
 (6) the permanency and duration of the relationship between the worker and the
employer; and
(7) the degree of dependency of the worker upon the employer for his continued
employment in that line of business.
The proper standard of economic dependence is whether the worker is dependent
on the alleged employer for his continued employment in that line of business
By applying the control test, it can be said that petitioner is an employee
of Kasei Corporation because she was under the direct control and supervision of
Seiji Kamura, the corporation’s Technical Consultant. She reported for work
regularly and served in various capacities as Accountant, Liaison Officer, Technical
Consultant, Acting Manager and Corporate Secretary, with substantially the same job
functions, that is, rendering accounting and tax services to the company and
performing functions necessary and desirable for the proper operation of the
corporation such as securing business permits and other licenses over an indefinite
period of engagement. Respondent corporation had the power to control petitioner
with the means and methods by which the work is to be accomplished.
2.)
The corporation constructively dismissed petitioner when it reduced her.
This amounts to an illegal termination of employment, where the petitioner is entitled
to full backwages
A diminution of pay is prejudicial to the employee and amounts to constructive
dismissal.
Constructive dismissal is an involuntary resignation resulting in cessation of
work resorted to when continued employment becomes impossible, unreasonable or
unlikely; when there is a demotion in rank or a diminution in pay; or when a clear
discrimination, insensibility or disdain by an employer becomes unbearable to an
employee.
Petition is GRANTED.

Under the economic reality test, the petitioner can also be said to be an
employee of respondent corporation because she had served the company for 6 yrs.
before her dismissal, receiving check vouchers indicating her salaries/wages, benefits,
13th month pay, bonuses and allowances, as well as deductions and Social Security
contributions from.

When petitioner was designated General Manager, respondent corporation made a

report to the SSS. Petitioner’s membership in the SSS evinces the existence of an
employer-employee relationship between petitioner and respondent corporation. The
coverage of Social Security Law is predicated on the existence of an employer-
employee relationship.
Lopez vs. Bodega City [G.R. No. 155731. Sept 3, 2007]
FACTS:
Under a concessionaire agreement, Lopez was the "lady keeper" of Bodega
City tasked with manning its ladies' comfort room. Yap (owner of Bodega)
alleged that Lopez have acted in a hostile manner against a lady customer
after the customer informed the management that Lopez was sleeping
while on duty. Yap later informed Lopez of the termination of the
concessionaire agreement between them. Lopez sued for illegal dismissal.
The concessionaire agreement merely stated that petitioner shall maintain
the cleanliness of the ladies' comfort room and observe courtesy guidelines
that would help her obtain the results they wanted to achieve.
There is nothing in the agreement which specifies the methods by which
petitioner should achieve these results. Respondents did not indicate the
manner in which she should go about in maintaining the cleanliness of the
ladies' comfort room.

ISSUE:

W/N Lopez was an employee of Bodega City?

Ruling:

Payment of wages

She presented a petty cash voucher showing that she received an allowance
for five (5) days. However, this solitary petty cash voucher did not prove
that she had been receiving salary from respondents or that she had been
respondents' employee for 10 years. If she was really an employee of
respondents for that length of time, she should have been able to present
salary vouchers or pay slips and not just a single petty cash voucher.

Also, she could have easily shown other pieces of evidence such as a
contract of employment, SSS or Medicare forms, or certificates of
withholding tax on compensation income; or she could have presented
witnesses to prove her contention that she was an employee of
respondents. But she failed to do so.

Control

It is true that petitioner was required to follow rules and regulations

prescribing appropriate conduct while within the premises of Bodega City.

However, this was imposed upon petitioner as part of the terms and
conditions in the concessionaire agreement embodied in a 1992 letter of
Yap addressed to petitioner.
ABS-CBN BROADCASTING CORPORATION vs. MARLYN
NAZARENO et al.
G.R. No. 164156
September 26, 2006
Facts: Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is
engaged in the broadcasting business and owns a network of television
and radio stations, whose operations revolve around the broadcast,
transmission, and relay of telecommunication signals. It sells and deals in
or otherwise utilizes the airtime it generates from its radio and television
operations. It has a franchise as a broadcasting company, and was
likewise issued a license and authority to operate by the National
Telecommunications Commission.
Petitioner employed respondents Nazareno, Gerzon, Deiparine, and
Lerasan as production assistants (PAs) on different dates. They were
assigned at the news and public affairs, for various radio programs in the
Cebu Broadcasting Station. On December 19, 1996, petitioner and the
ABS-CBN Rank-and-File Employees executed a Collective Bargaining
Agreement (CBA) to be effective during the period from December 11,
1996 to December 11, 1999. However, since petitioner refused to
recognize PAs as part of the bargaining unit, respondents were not
included to the CBA.
On October 12, 2000, respondents filed a Complaint for Recognition of
Regular Employment Status, Underpayment of Overtime Pay, Holiday
Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th
Month Pay with Damages against the petitioner before the NLRC. The
Labor Arbiter rendered judgment in favor of the respondents, and
declared that they were regular employees of petitioner as such, they
were awarded monetary benefits. NLRC affirmed the decision of the
Labor Arbiter. Petitioner filed a motion for reconsideration but CA
dismissed it.
Issue: Whether or not the respondents were considered regular
employees of ABS-CBN.
Ruling: The respondents are regular employees of ABS-CBN. It was
held that where a person has rendered at least one year of service,
regardless of the nature of the activity performed, or where the work is
continuous or intermittent, the employment is considered regular as long
as the activity exists, the reason being that a customary appointment is
not indispensable before one may be formally declared as having
attained regular status.
In Universal Robina Corporation v. Catapang, the Court states that the
primary standard, therefore, of determining regular employment is the
reasonable connection between the particular activity performed by the
employee in relation to the usual trade or business of the employer. The
test is whether the former is usually necessary or desirable in the usual
business or trade of the employer. The connection can be determined by
considering the nature of work performed and its relation to the scheme
of the particular business or trade in its entirety. Also, if the employee has
been performing the job for at least a year, even if the performance is not
continuous and merely intermittent, the law deems repeated and
continuing need for its performance as sufficient evidence of the
necessity if not indispensability of that activity to the business. Hence, the
employment is considered regular, but only with respect to such activity
and while such activity exists.
Additionally, respondents cannot be considered as project or program
employees because no evidence was presented to show that the
duration and scope of the project were determined or specified at the
time of their engagement. In the case at bar, however, the employer-
employee relationship between petitioner and respondents has been
proven. In the selection and engagement of respondents, no peculiar or
unique skill, talent or celebrity status was required from them because
they were merely hired through petitioner’s personnel department just like
any ordinary employee. Respondents did not have the power to bargain
for huge talent fees, a circumstance negating independent contractual
relationship. Respondents are highly dependent on the petitioner for
continued work. The degree of control and supervision exercised by
petitioner over respondents through its supervisors negates the allegation
that respondents are independent contractors.
The presumption is that when the work done is an integral part of the
regular business of the employer and when the worker, relative to the
employer, does not furnish an independent business or professional
service, such work is a regular employment of such employee and not an
independent contractor. As regular employees, respondents are entitled
to the benefits granted to all other regular employees of petitioner under
the CBA . Besides, only talent-artists were excluded from the CBA and
not production assistants who are regular employees of the respondents.
Moreover, under Article 1702 of the New Civil Code: “In case of doubt, all
labor legislation and all labor contracts shall be construed in favor of the
safety and decent living of the laborer.”
Tabas vs. California Manufacturing Co., Inc. [169 SCRA 497, GR 80680] The bare fact that Livi maintains a separate line of business does not extinguish the
Posted by Pius Morados on November 17, 2011 equal fact that it has provided California with workers to pursue the latter’s own
(Labor Standards – Both employer and labor only contractor may be liable) business.

Facts:
Petitioners filed a petition in the NLRC for reinstatement and payment of various
benefits against California Manufacturing Company. The respondent company then
denied the existence of an employer-employee relationship between the company
and the petitioners.
In this connection, we do not agree that the petitioners had been made to perform
activities ‘which are not directly related to the general business of manufacturing,”
California’s purported “principal operation activity.” Livi, as a placement agency,
had simply supplied California with the manpower necessary to carry out its
(California’s) merchandising activities, using its (California’s) premises and
equipment.

Pursuant to a manpower supply agreement, it appears that the petitioners prior their
involvement with California Manufacturing Company were employees of Livi
Manpower service, an independent contractor, which assigned them to work as
“promotional merchandisers.” The agreement provides that:

California “has no control or supervisions whatsoever over

[Livi’s] workers with respect to how they accomplish their work or
perform [Californias] obligation” It was further expressly stipulated
that the assignment of workers to California shall be on a “seasonal and
contractual basis”; that “[c]ost of living allowance and the 10 legal
holidays will be charged directly to [California] at cost “; and that
“[p]ayroll for the preceding [sic] week [shall] be delivered by [Livi] at
[California’s] premises.”

Issue: WON principal employer is liable.

Held: Yes.

The existence of an employer-employee relation cannot be made the subject of an

agreement.

Based on Article 106, “labor-only” contractor is considered merely as an agent of

the employer, and the liability must be shouldered by either one or shared by both.

There is no doubt that in the case at bar, Livi performs “manpower services”,
meaning to say, it contracts out labor in favor of clients.

We hold that it is one notwithstanding its vehement claims to the contrary, and
notwithstanding the provision of the contract that it is “an independent contractor.”

The nature of one’s business is not determined by self-serving appellations one

attaches thereto but by the tests provided by statute and prevailing case law.
VICTORY LINER, INC., Petitioner, vs . PABLO M. RACE, Respondent.
FACTS
Respondent was employed by the petitioner as a bus driver. On the night of
24 August 1994, the bus he was driving was bumped by a Dagupan-bound
bus.
As a consequence thereof, respondent suffered a fractured left leg and was
rushed to the Country Medical and Trauma Center in Tarlac City where he
was operated on and confined from 24 August 1994 up to 10 October 1994.
One month after his release from the said hospital, the respondent was
confined again for further treatment of his fractured left leg at the Specialist
Group Hospital in Dagupan City.
His confinement therein lasted a month. Petitioner shouldered the
doctor’s professional fee and the operation, medication and
hospital expenses of the respondent in the aforestated hospitals.
Respondent, still limping heavily, went to the petitioner’s office to report for
work. He was, however, informed by the petitioner that he was
considered resigned from his job. Respondent refused to accede and
insisted on having a dialogue with the petitioner’s officer named Yolanda
Montes. During their meeting, Montes told him that he was deemed to have
resigned from his work and to accept a consideration of
P50,000.00. Respondent rejected the explanation and offer. Thereafter,
before Christmas of 1998, he again conversed with Montes who reiterated to
him that he was regarded as resigned but raised the consideration therein to
P100,000.00. Respondent rebuffed the increased offer. On 30 June 1999,
respondent, through his counsel, sent a letter to the petitioner demanding
employment-related money claims.
There being no response from the petitioner, the respondent filed before the
Labor Arbiter on 1 September 1999 a complaint for (1) unfair labor practice;
(2) illegal dismissal; (3) underpayment of wages; (4) nonpayment of
overtime and holiday premium, service incentive leave pay, vacation and sick
leave benefits, 13th month pay; (5) excessive deduction of withholding tax
and SSS premium; and (6) moral and exemplary damages and attorney’s
fees.
In its Position Paper dated 27 March 2000, petitioner claimed that the
respondent’s cause of action against petitioner had already prescribed
because when the former instituted the aforesaid complaint on 1 September
1999, more than five years had already lapsed from the accrual of his cause
of action on 24 August 1994.
ISSUE
Whether or not the cause of action of respondent has already prescribed.
HELD
The SC held that the cause of action of respondent has not prescribed.
In illegal dismissal cases, the employee concerned is given a period
of four years from the time of his dismissal within which to institute
a complaint.
This is based on Article 1146 of the New Civil Code which states
that actions based upon an injury to the rights of the plaintiff must
be brought within four years.
The four-year prescriptive period shall commence to run only upon the
accrual of a cause of action of the worker. It is settled that in illegal
dismissal cases, the cause of action accrues from the time the employment
of the worker was unjustly terminated.
Thus, the four-year prescriptive period shall be counted and computed from
the date of the employee’s dismissal up to the date of the filing of complaint
for unlawful termination of employment.
In the case at bar, it is error to conclude that the employment of the
respondent was unjustly terminated on 10 November 1994 because
he was, at that time, still confined at the hospital for further
treatment of his fractured left leg. He must be considered as merely
on sick leave at such time.
Likewise, the respondent cannot also be deemed as illegally dismissed from
work upon his release from the said hospital in December 1994 up to
December 1997 since the records show that the respondent still
reported for work to the petitioner and was granted sick and disability
leave by the petitioner during the same period.
The respondent must be considered as unjustly terminated from
work in January 1998 since this was the first time he was informed
by the petitioner that he was deemed resigned from his
work. During that same occasion, the petitioner, in fact, tried to convince
the respondent to accept an amount of P50,000.00 as a consolation for his
dismissal but the latter rejected it. Thus, it was only at this time that the
respondent’s cause of action accrued. Consequently, the respondent’s filing
of complaint for illegal dismissal on 1 September 1999 was well within the
four-year prescriptive period.

It is also significant to note that from 10 November 1994 up to December

1997, the petitioner never formally informed the respondent of the fact of his
dismissal either through a written notice or hearing. Indeed, it cannot be
gainfully said that respondent was unlawfully dismissed on 10 November
1994 and that the cause of action accrued on that date.
Goma vs. Pamplona Plantation
Facts:
Petitioner claimed that he worked as a carpenter at the Hacienda Pamplona
since 1995; that he worked from 7:30 a.m. to 12:00 noon and from 1:00 p.m. to
5:00 p.m. daily with a salary rate of P90.00 a day paid weekly; and that he
worked continuously until 1997 when he was not given any work
assignment.
On a claim that he was a regular employee, petitioner alleged to have been
illegally dismissed when the respondent refused without just cause to give
him work assignment.
Thus, he prayed for backwages, salary differential, service incentive leave
pay, damages and attorney’s fees.
On the other hand, respondent denied having hired the petitioner as its
regular employee. It instead argued that petitioner was hired by a certain
Antoy Cañaveral, the manager of the hacienda at the time it was owned by
Mr. Bower and leased by Manuel Gonzales, a jai-alai pelotari known as
“Ybarra.” Respondent added that it was not obliged to absorb the employees
of the former owner.
Issue: WON petitioner is a regular employee.
Held:
Article 280 of the Labor Code provides that there are two kinds of REGULAR
EMPLOYEES, namely:
Regular employees by nature of work – Those who are engaged to perform
activities which are usually necessary or desirable in the usual business or
trade of the employer (regardless of length of service); and
 Regular employees by years of service – Those who have rendered at
least one year of service, whether continuous or broken, with respect to
the activity in which they are employed (regardless of nature of work).
If the law has been performing the job for at least a year, even if the
performance is not continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as sufficient evidence of
the necessity, if not indispensability, of that activity to the business.
IN THE CASE AT BAR, Petitioner was engaged to perform carpentry work.
His services were needed for a period of 2 years until such time that
respondent decided not to give him work assignment anymore. Owing to his
length of service, petitioner became a regular employee, by operation of
law.
The principal test used to determine whether employees are PROJECT
EMPLOYEES as distinguished from REGULAR EMPLOYEES, is whether or
not the employees were assigned to carry out a specific project or
undertaking, the duration or scope of which was specified at the time the
employees were engaged for that project.
In this case, apart from the respondent’s bare allegation that petitioner was
a project employee, it had not shown that petitioner was informed that he
would be assigned to a specific project or undertaking. Neither was it
established that he was informed of the duration and scope of such project
or undertaking at the time of his engagement.
Petition granted.